The Department for Communities and Local Government has actively considered the needs of the partially sighted in accessing this document. The text will be made available in full on the Department’s web site in accordance with the W3C’s Web Accessibility Initiative’s criteria. The text may be freely downloaded and translated by individuals or organisations for conversion into other accessible formats. If you have other needs in this regard, or you are a carer for someone who has, please contact The Department for Communities and Local Government. Contents

PREFACE ....................................................................................................................... i Symbols and conventions ................................................................................................ ii Rounding..................................................................................................................... ii

CHAPTER 1 3 Local government.............................................................................................................3 1.1 What is local government? ...............................................................................3 1.2 Local government structure and services.........................................................3

CHAPTER 2 6 How is the money found? .................................................................................................6 2.1. Summary of sources of local government income ............................................6 2.2. Revenue grants ................................................................................................6 2.3. Sales, fees and charges ...................................................................................8 2.4. Council tax .......................................................................................................8 2.5. Non-domestic rates ........................................................................................11

CHAPTER 3 16 How is the money spent? – Revenue expenditure .........................................................16 3.1. Summary of revenue expenditure ..................................................................16 3.2. General Fund Revenue Account expenditure definitions ...............................16 3.3. Labour, goods and services purchased .........................................................19 3.4. Revenue reserves ..........................................................................................20 3.5 External trading services ................................................................................21 3.6 Housing Revenue Account (HRA) ..................................................................22

CHAPTER 4 24 How is the money spent? – Capital expenditure ............................................................24 4.1. Capital spending and receipts ........................................................................24 4.2. Capital financing.............................................................................................26

CHAPTER 5 28 Borrowing and Investments ............................................................................................28 5.1. Outstanding debt and holdings of investments ...............................................28 5.2. Borrowing and investment transactions ......................................................... 30

CHAPTER 6 31 Local government pay and pensions..............................................................................31 6.1. Local government employment ......................................................................31 6.2. Local government pay expenditure ................................................................31 6.3. Local authority pension funds.........................................................................32 PREFACE

This is the 26th edition of *Local Government Financial Statistics (LGFS) England*, providing a summary of financial data from local authorities with links to the statistical releases that contain the full set of data. The previous 25 editions have provided more context and commentary on the data, and earlier versions of LGFS have been published and presented to Parliament since the 1930s. A separate document containing background to local government structures and definitions will be available on-line, and will be updated as necessary. Links have been provided to the relevant statistical releases within chapters, and these may contain more up to date statistics. Most of the information comes from forms sent to the Department for Communities and Local Government by all local authorities in England.

Local government expenditure represents nearly a quarter of all public expenditure, and the data are used in the monitoring of public expenditure and the compilation of the National Accounts. Local government finance data are also used by the Government to inform the allocation of resources to local government and the development and monitoring of local government finance policy, and more widely, by local authorities, businesses and members of the public.

This volume contains outturn summaries of local government expenditure and income for years up to 2014-15, the latest year for which complete information is available, and estimates for 2015-16. Data are published throughout the year in statistical releases and live tables. These are all available on the Department’s website. Therefore more up to date data will be available before the next edition of LGFS.

Some of the data within this publication are published as National Statistics and as such have been produced to the high professional standards set out in the National Statistics Code of Practice. Most of the information in this publication is based on data supplied by local authorities to the Department for Communities and Local Government in statutory statistical returns. Due to the statutory nature of the returns, response rates are normally 100%. Figures are subject to rigorous pre-defined validation tests both within the form itself and also within DCLG as the forms are received and stored. The publication itself, once prepared, is also subject to intensive peer review before being cleared as fit for the purposes of publication.

Local government finance statistics publications and other detailed data can be found online at: https://www.gov.uk/government/organisations/department-for-communities-and-local-government/about/statistics

Further information on data quality, methodology and the uses of the data can be found on these releases, as well as a more detailed look at the statistical outputs. If you cannot locate the data you require please use the contact details below. The key purpose of the LGFS compendium is to present a copy to parliament every year as required by law. However, it is also used by a variety of different users and has been developed through time to be accessible to a wider audience. Users include local authorities (including fire, police, transport and waste authorities), central government colleagues, libraries, schools, contacts in government or local government organisations and the private sector.

Unlike previous years, this year’s LGFS has been streamlined to present only an overview of all the data collected on local government finance by DCLG. This follows a consultation which showed that limited use was made of the LGFS as all the information collected is published online. Users who want detailed commentary of the data are advised to refer to previous versions of the LGFS, or to refer to the definitions document published separately.

As there have been no recent changes to local government’s structure, maps and lists of all local authorities as well as any significant changes to the functions and structure of local government since the 1970s can be found in the 2014 LGFS publication, which can be found online at https://www.gov.uk/government/statistics/local-government-financial-statistics-england-2014

We welcome comments and suggestions for further improvement or about your experiences with this product. This may include comments on data quality, timing and the format of the statistics. In addition local authority level data are available upon request.

Please contact us at: lgfstats@communities.gsi.gov.uk

**Responsible Statistician:** Jo Coleman

**Symbols and conventions**

| Symbol | Description | |--------|----------------------| | … | not available | | – | not relevant | | - | negative | | 0 | zero or negligible | | B | budget | | E | estimate | | F | forecast | | P | provisional | | R | revised | | || | discontinuity |

**Rounding**

Where figures have been rounded, there may be a slight discrepancy between the total and the sum of constituent items. CHAPTER 1 Local government

1.1 What is local government?

1.1.1 Local government is one way in which the country’s governance, administration and public service delivery is carried out. Two key features of local authorities are that they tend to have elected representatives and the ability to raise taxes locally.

1.1.2 Local authorities are statutory bodies created by Acts of Parliament. They are not accountable to Parliament as they are directly elected by their local communities. Local government is a devolved responsibility in Scotland, Wales and Northern Ireland.

1.1.3 Local authorities, their members and the administrative units supporting them have a number of objectives, the key one being the delivery of services. They deliver services in line with national objectives, and in a manner that meets the diverse requirements of different neighbourhoods and communities. Services are delivered directly through their employees and indirectly through other bodies. More recently, outside agencies have played an increasing role in service delivery.

1.2 Local government structure and services

1.2.1 This document covers local government in England in 2014-15. The structure of local government varies across the country. The structure of local authorities takes one of six forms:

- Metropolitan Districts
- London Boroughs
- Unitary Authorities
- Shire Counties
- Shire Districts
- Single Purpose Authorities

1.2.2 In the six metropolitan areas (Greater Manchester, Merseyside, South Yorkshire, Tyne and Wear, West Midlands and West Yorkshire), most services are run by metropolitan districts.

1.2.3 In London, the London boroughs and the City of London deliver most of the functions. The Greater London Authority (GLA) comprises a directly elected Mayor and a separately elected Assembly. The GLA group consists of the following four functional bodies: • Mayor’s Office for Policing and Crime (MOPAC) • London Fire and Emergency Planning Authority (LFEPA) • Transport for London (TfL) • GLA Land and Property (GLAP).

1.2.4 In most of the rest of England, called the shire areas, there are two main tiers of local authorities: shire counties and shire districts. However, in some parts of the country, a single unitary authority carries out shire county and shire district responsibilities. Since 1995, 56 single unitary authorities have been created.

1.2.5 Fire & rescue and passenger transport are typically the responsibility of single purpose authorities, which usually share the same boundaries. Single purpose authorities also extend to National Parks and some waste disposal services. There is also a Police and Crime Commissioner for each constabulary which cover each metropolitan area and shire county (sometimes combinations of these).

1.2.6 Additionally, Parishes and Charter Trustees represent the third tier of local government, the most local level of government in England. They typically fund their activities by charging an additional cost known as a “precept” to each householder’s council tax bill. There are more than 10,000 local parishes in England. Of these, 8,800 charge a precept, which is collected by the local billing authority on their behalf. Further details on geographies can be found online at https://www.ons.gov.uk/methodology/geography. Table 1.2a shows details on the number of authorities in England.

| Local authority level | Parish Level | |-----------------------|-------------| | Billing authorities | Major precepting authorities | Other authorities | All authorities | Parishes | | Shire areas | 257 | 82 | 10 | 349 | 8,580 | | Metropolitan areas | 36 | 12 | 8 | 56 | 230 | | London | 33 | 1 | 5 | 39 | 3 | | England | 326 | 95 | 23 | 444 | 8,813 |

(a) The count of precepting authorities excludes parish councils. (b) Other authorities are parks, waste and passenger transport authorities (c) includes non-zero precepting authorities only

1.2.7 Local authority spending can be divided into revenue expenditure and capital expenditure. On the whole, revenue expenditure (see Chapter 3) is financed through a balance of central government grant, retained non-domestic rates and the locally raised council tax (see Chapter 2). Capital expenditure is principally financed through central government grants, borrowing and capital receipts (see Chapter 4). 1.2.8 Local authorities are required by law to secure the necessary funds to finance their operations, to provide an accurate account of where the money goes and to provide accounts which balance.

1.2.9 Only some of the local authorities may collect money directly through council tax. These are called billing authorities. Others receive funds indirectly, either by precepting on a billing authority or by other channels, such as levies. In shire areas, county councils are precepting authorities, as district councils are the billing authorities. Police and fire and rescue authorities are also precepting authorities. Of the 444 local authorities in England, 326 are billing authorities, who raise money via council tax, and 95 are major precepting authorities. Additionally, there are 8,800 parishes that charge a precept, and these are situated in 241 billing authorities. CHAPTER 2

How is the money found?

2.1. Summary of sources of local government income

2.1.1. The main sources of income for local government in England are council tax, retained non-domestic rates, other government grants (including specific government grants), borrowing and investments, interest receipts, capital receipts, sales, fees and charges and council rents.

2.1.2. Table 2.1a provides details of how much income has been raised through these funding streams.

2.2. Revenue grants

2.2.1. Funding distributed through the local government finance settlement plus certain non-housing revenue specific grants are known as Aggregate External Finance (AEF). AEF includes Revenue Support Grant (RSG), redistributed non-domestic rates and certain specific grants. AEF does not include housing subsidy(^1), which until its cessation at the end of 2011-12 was administered and recorded separately, as part of the Housing Revenue Account (HRA).

2.2.2. Prior to 2014-15, the funding distributed through the local government finance settlement was distributed based on the socio-economic and demographic characteristics of authorities, together with a measure of the authority's ability to raise council tax locally i.e. the number of Band-D equivalent properties within its area.

2.2.3. The business rate retention scheme, introduced in April 2013 has reformed the way in which local government is funded. It provides a direct link between business rates growth and the amount of money available to local authorities to spend on local people and services. Under the business rates retention scheme, authorities overall keep half of the local business rates revenue as well as the growth on their share. A system of tariffs and top-ups provides a one-off rebalancing of resources at the outset in order to ensure that no authority loses out in its ability to meet local service needs as a result of their business rates tax base.

2.2.4. The other half of business rates revenue is used to fund the majority of Revenue Support Grant provided to local authorities. Revenue Support Grant is a central government grant given to local authorities which can be used to finance revenue expenditure on any service.

(^1) See Chapter 3 for further details of housing subsidy. | Table 2.1a: Summary of local authority income 2010-11 to 2014-15 | £ million | |---------------------------------------------------------------|----------| | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | | **Grant income:** | | | | | | | Revenue Support Grant (a) | 3,122 | 5,873 | 448 | II | 15,175 | | Redistributed non-domestic rates (a) | 21,517 | 19,017 | 23,129 | II | - | | Police Grant (a) | 4,374 | 4,546 | 4,224 | II | 7,565 | | Specific and special grants inside Aggregate External Finance (AEF) | 45,750 | 45,502 | 41,820 | 41,760 | 40,805 | | Area Based Grant | 4,363 | II | - | - | - | | Local Services Support Grant (LSSG) (b) | - | 253 | 223 | 77 | 48 | | General GLA Grant | 48 | 63 | 50 | - | - | | Grants outside AEF (c) | 19,069 | 18,614 | 18,850 | 18,417 | 18,655 | | Housing subsidy (d) | -494 | -704 | -791 | -795 | -692 | | Grants towards capital expenditure | 9,592 | II | 8,637 | 9,739 | 8,782 | | **Total grant income** | 107,341 | 101,800 | 97,692 | 90,982 | 89,271 | | **Locally-funded income:** | | | | | | | Council tax (e) | 26,254 | 26,451 | 26,715 | 23,371 | 23,964 | | Retained Income from Rate Retention Scheme (a) | - | - | - | II | 10,719 | | External interest receipts | 663 | 860 | 815 | 839 | 865 | | Capital receipts (f) | 1,498 | 2,013 | 2,124 | 2,481 | 2,996 | | Sales, fees and charges (g) | 12,597 | 11,991 | 12,201 | 12,695 | II | | Council rents | 6,317 | 6,583 | 6,916 | 7,215 | 7,439 | | **Total locally-funded income** | 47,328 | 47,899 | 48,771 | 57,319 | 58,335 | | Other income and adjustments (h) | 10,535 | 9,995 | 8,842 | 9,253 | II | | **Total income** | 165,204 | 159,694 | 155,306 | 157,554 | 166,075 | | Grants as a percentage of total income | 65% | 64% | 63% | 58% | 54% |

Sources: Revenue Outturn (RO) returns and Capital Outturn Returns (COR), 2010-11 to 2014-15

Comparisons across years may not be valid owing to changing local authority responsibilities and methods of funding. Major changes are separated with a time series break marked as II

(a) Since 2013-14 there were changes to the Department’s Local Government Finance Settlement. This affects the figures for Revenue Support Grant, Police Grant and Non-domestics rates.

(b) From 2011-12, Local Services Support Grant (LSSG), an unringfenced grant paid under section 31 of the Local Government Act 2003, was introduced to support local government functions.

(c) Excludes council tax benefit subsidy and rent rebates granted to HRA tenants.

(d) Housing Subsidy includes ‘Government grants and assistance (including downward adjustments)’ less Transfers to the General Fund Revenue Account (GFRA) and Major Repairs Reserve (MRR). These are all recorded in the Housing Revenue Account (HRA) in RO4

(e) Includes council taxes financed from Council Tax Benefit Grant but excludes council taxes financed from local authority contributions to council tax benefit.

(f) Capital receipts for 2011-12 excludes the One-off HRA self-financing determination & premium

(g) Since 2014-15 Sales, Fees and Charges from the Trading account are no longer recorded. For 2014-15 onwards this figure excludes the any sales, fees and charges from the trading accounts

(h) Other income and adjustments includes Other Income from the Services areas, Other Items (surpluses/deficits from the collection fund), Inter-authority reorganisation recoupment, leaseholder charges and other contributions towards expenditure in the Housing Revenue Account. Prior to 2014-15 this also included other income in the Trading Accounts, this was not recorded for 2014-15 onwards.

To avoid double counting, levies and charges from other accounts recorded in the RO6 are removed from this. Before 2014-15 Receipts from other authorities were also excluded but this figure is no longer regularly collected as part of the SAR return. 2.3. **Sales, fees and charges**

2.3.1. Sales, fees and charges are the amounts received by local government as a result of providing a service. They vary widely between services in both the amount of money involved, and their nature, for example library fines and planning application fees. Local authorities receive income from sales fees and charges from over 100 service areas. **Table 2.3a** shows sales, fees and charges by service area from 2010-11 to 2014-15.

| Service Area | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | |--------------------------------------------------|---------|---------|---------|---------|---------| | Education | 2,126 | 1,841 | 1,713 | 1,672 | 1,814 | | Highways and transport | 2,063 | 1,984 | 2,011 | 2,063 | 1,884 | | Social Care | 2,718 | 2,686 | 2,747 | 2,834 | 2,799 | | **of which:** | | | | | | | Children Social Care | 132 | 115 | 119 | 110 | 147 | | Adult Social Care | 2,586 | 2,570 | 2,628 | 2,724 | 2,653 | | Public Health (b) | - | - | - | 24 | 16 | | Housing (excluding HRA) (c) | 555 | 515 | 600 | 636 | 653 | | Cultural, environmental and planning | 2,541 | 2,515 | 2,549 | 2,593 | 2,738 | | **of which:** | | | | | | | Cultural | 915 | 889 | 872 | 860 | 860 | | Environmental | 954 | 1,013 | 1,050 | 1,034 | 1,108 | | Planning and development | 672 | 613 | 627 | 700 | 769 | | Police | 447 | 446 | 446 | 469 | 455 | | Fire | 35 | 25 | 29 | 30 | 31 | | Central services | 1,125 | 987 | 1,169 | 1,396 | 1,304 | | Other | 85 | 76 | 51 | 50 | 47 | | **Total all services** | 11,694 | 11,073 | 11,316 | 11,768 | 11,741 | | External Trading Accounts (d) | 902 | 918 | 885 | 927 | ... | | **Total** | 12,597 | 11,991 | 12,201 | 12,695 | ... |

Source: Revenue Outturn (RO) returns - RSX and TSR, 2010-11 to 2014-15 (a) Sales, fees and charges for General Fund only (b) Responsibility for Public Health transferred to Local Government in 2013-14 (c) Housing Revenue Account (d) Since 2014-15 the TSR only collects net surplus/deficit so unable to identify Sales, Fees and Charges for Trading Accounts

2.4. **Council tax**

2.4.1. Council tax is the main source of locally-raised income for many local authorities. It is therefore an important source of funding used for meeting the difference between the amount a local authority wishes to spend and the amount it receives from other sources such as government grants. The amount of council tax payable on a property depends in part on the valuation band to which it is allocated and in part on the number of occupants that live in the property. 2.4.2. **Table 2.4a** provides figures for the total number of domestic dwellings in England in September each year from 2011 to 2015, those that are liable for council tax i.e. chargeable dwellings, those that are exempt from council tax, those that receive discount on their council tax and those that are required to pay a premium on their council tax.

| Table 2.4a : Number of chargeable dwellings 2011-2015 (a) | Thousands | |--------------------------------------------------------|-----------| | | 2011 | 2012 | 2013 | 2014 | 2015 | | Total number of dwellings on valuation lists | 23,036 | 23,178 | 23,312 | 23,466 | 23,652 | | Number of dwellings exempt from council tax | 788 | 802 | 516 | 520 | 531 | | Number of demolished dwellings | 2 | 2 | 2 | 2 | 2 | | Number of dwellings on valuation list liable for council tax (b) | 22,246 | 22,374 | 22,793 | 22,944 | 23,120 | | Number of dwellings subject to a discount or a premium | 8,303 | 8,293 | 8,161 | 8,111 | 8,085 | | of which: | | | | | | | - second homes (c) | 246 | 255 | 40 | 27 | 27 | | - empty homes subject to a discount (d) | 126 | 98 | 135 | 121 | 107 | | - empty homes subject to a premium (d) | - | - | 56 | 56 | 59 | | - single adults | 7,703 | 7,706 | 7,698 | 7,669 | 7,653 | | - all residents disregarded for council tax purposes | 33 | 33 | 33 | 34 | 34 | | - all but one resident disregarded for council tax purposes | 196 | 201 | 199 | 203 | 205 | | Number of dwellings not subject to a discount or a premium | 13,943 | 14,081 | 14,632 | 14,834 | 15,035 | | of which: | | | | | | | - empty homes (d) | 153 | 161 | 290 | 283 | 283 | | - second homes (c) | - | - | 215 | 224 | 219 | | - others | 13,790 | 13,920 | 14,127 | 14,326 | 14,534 |

Source: CTB return

(a) Data taken as at the second Monday in September (b) Total dwellings on valuation list less those exempt from council tax and demolished dwellings (c) Until 2012, at local authority discretion, second homes could be subject to a discount of between 10% and 50%. From 1 April 2013 this became between 0% and 50%. (d) Long-term empty homes are those dwellings which are unoccupied and substantially unfurnished and, at local authority discretion, can be subject to a discount of between 0% and 100%. From 1 April 2013, if they have been empty for more than two years, they may be charged a premium of up to 50%.

2.4.3. Band D council tax is the usual standard measure of council tax and is the council tax payable on a Band D dwelling occupied as a main residence by at least two adults, before any reductions due to discounts, exemptions or local council tax support schemes. This definition is widely regarded as a benchmark when comparing council tax levels in different areas or over time.

2.4.4. The council tax paid by a dwelling may be made up of several elements. Depending on its location, in addition to the council tax for the local authority responsible for the area, it may consist of council tax that will be redistributed to some or all of the following: county council (the Greater London Authority in London), fire and rescue authority, police & crime commissioner. Dwellings may also be liable for council tax to fund their local parish council activities. Council tax levels

2.4.5. **Table 2.4b** gives figures for levels of, and changes in, the average Band D council tax for England for 2010-11 to 2015-16. These figures include parish precepts.

| Year | £ | % change | |--------|-------|----------| | 2010-11| 1,439 | 1.8 | | 2011-12| 1,439 | 0.0 | | 2012-13| 1,444 | 0.3 | | 2013-14| 1,456 | 0.8 | | 2014-15| 1,468 | 0.9 | | 2015-16| 1,484 | 1.1 |

Source: CTR returns

(a) Figures include parish precepts.

2.4.6. Between 2011-12 and 2015-16 a grant was offered to those authorities that set their average Band D council tax (excluding parish precepts) either at or below the level for the previous year. As a result there was no increase in the average band D figure for England in 2011-12.

Parishes and other local precepting authorities in England

2.4.7. **Table 2.4c** shows information relating to parishes and other local precepting authorities and the precepts they raise.

| Year | Total number(a) | Tax base(c) (thousands) | Aggregate of local precepts (£000) | Average parish precept per Band D (£) | Change (£) | Percentage change | |--------|-----------------|--------------------------|-----------------------------------|--------------------------------------|------------|------------------| | 2011-12| 9,115 | 7,984.1 | 367,056 | 45.97 | 1.77 | 3.9% | | 2012-13| 9,065 | 8,046.2 | 384,104 | 47.74 | 2.49 | 5.2% | | 2013-14| 8,805 | 7,307.4 | 367,048 | 50.23 | 2.14 | 4.3% | | 2014-15| 8,813 | 7,424.2 | 388,808 | 52.37 | 1.75 | 3.3% | | 2015-16| 8,810 | 7,560.4 | 409,146 | 54.12 | | |

Source: CTR returns

(a) In some cases parishes group together for precepting purposes. Data collected by CIPFA up to and including 2012-13 split all groupings and listed all parishes individually. This makes the number of parishes setting a precept from 2013-14 onwards look smaller than in previous collections.

(b) The localisation of council tax support in 2013-14 has changed the way in which the council tax requirement is calculated which means the tax base and aggregate of local precepts in 2013-14 onwards are not comparable with earlier years.

(c) Council tax payers in the Charter Trustees for the City of Durham have only been included once here, although they are actually spread across multiple parishes in Durham.

2.4.8. Further details about council tax, parishes and other local precepting authorities and collection rates can be found via 2.5. **Non-domestic rates**

2.5.1. Non domestic rates, also known as business rates, are collected by billing authorities and are the way in which those that occupy a non-domestic property (or hereditament) contribute towards the funding of local services. The introduction of the business rates retention scheme in 2013-14 allows local authorities to retain a proportion of the revenue that is generated in their area.

2.5.2. Each hereditament has a rateable value that is based, broadly, on the annual rent that the property could have been let for on the open market at a particular date (currently 1 April 2008, using a list compiled for 1 April 2010). Details of the hereditaments are recorded on rating lists that are compiled and maintained by the Valuation Office Agency (VOA), an agency of HM Revenue and Customs. The total number of hereditaments in England and their rateable value for 2011-12 to 2015-16 are shown in Table 2.5a.

2.5.3. Generally, the rates bill for a property is the product of its rateable value and the relevant national non-domestic rating multiplier and billing authorities work out the rates liability for every hereditament by multiplying the rateable value of the property by the appropriate multiplier. There are two multipliers, the non-domestic multiplier and the small business non domestic rate multiplier. The former is higher because it includes a supplement which is used to fund the Small Business Rate Relief scheme, which is designed to help small businesses meet the cost of their business rates.

2.5.4. The Government sets the multipliers for each financial year for England according to formulae set by legislation. Generally, the multipliers increase in line with the Retail Price Index in September of the preceding year. However in 2014-15, the Government capped the increase in the multiplier for that year at 2% to provide business rate payers with additional support. The multipliers for 2011-12 to 2015-16 are shown in Table 2.5a.

| Table 2.5a Number of hereditaments, their rateable value and multipliers used: England: 2011-12 to 2015-16 | |---------------------------------------------------------------| | **Number of hereditaments on rating list as at 30 Sept ('000s)** (a) | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | | Number of hereditaments on rating list as at 30 Sept (a) | 1,735 | 1,759 | 1,771 | 1,787 | 1,816 | | Aggregate rateable value on rating list as at 30 Sept (a) | 56,846 | 57,178 | 57,154 | 57,069 | 57,224 | | Small business rate multiplier (pence) | 42.6 | 45.0 | 46.2 | 47.1 | 48.0 | | National non-domestic rates multiplier (pence) | 43.3 | 45.8 | 47.1 | 48.2 | 49.3 |

Source: NNDR1 returns

(a) Data taken from VOA local list as at 30 September of the previous year e.g 2015-16 data taken as at 30 September 2014. 2.5.5. Since the introduction of the business rates retention scheme, the local government sector (local authorities and fire and rescue authorities) are now able to benefit directly from supporting local business growth as they are allowed to keep half of any increases in business rates revenue to invest in local services.

2.5.6. In addition, safety net payments are available if a council’s business rates income falls by a certain amount. This safety net is be funded by a levy paid by those councils whose business rates revenue increases by a disproportionate amount compared to their needs. The levy is designed to ensure that the more councils grow their business rates, the more they benefit.

2.5.7. Table 2.5b shows details of the amount of non-domestic rates that local authorities collected in 2013-14 and 2014-15 and their forecasts for 2015-16. It does not show information prior to 2013-14 as this was under the old non-domestic rates system and so is not strictly comparable.

2.5.8. There are a number of rate reliefs that can be granted in certain circumstances by local authorities. Table 2.5c provides details of these reliefs. In addition to the Small Business Rate Relief scheme which, as its name suggests, is targeted at small businesses there are mandatory reliefs which are automatic entitlements in any local authority area, and discretionary reliefs which are granted at a local authority’s discretion. An example of these two types of relief is properties held by charities, which are automatically entitled to mandatory relief of 80 per cent, and local authorities then have the discretion to top that up to 100 per cent. The cost of both mandatory and discretionary relief is borne by both central and local government.

2.5.9. In addition, at a revaluation, transitional arrangements are introduced which cap significant increases and decreases in bills. The transitional scheme introduced from April 2010 aims to be revenue neutral by phasing in both increases and decreases over five years, instead of all ratepayers receiving the full impact of the changes immediately on 1 April 2010.

2.5.10. Information for the amounts of non-domestic rates collected prior to 2013-14 and further details on data in this table are available via https://www.gov.uk/government/collections/national-non-domestic-rates-collected-by-councils | | Outturn | £ million | |--------------------------------|---------|-----------| | | 2013-14 | 2014-15 | 2015-16 | | **Gross rates payable in year** | | | | | Net cost of Small Business Rate relief | 591 | 580 | 439 | | Other mandatory relief | 2,452 | 2,471 | 2,485 | | Discretionary relief | 100 | 312 | 414 | | **Total cost of reliefs** | 3,142 | 3,363 | 3,337 | | **Gross Rates Payable in year less total cost of reliefs** | 22,476 | 22,675 | 24,042 | | Net cost of transitional arrangement (a) | 36 | 119 | 0 | | **Net Rates Yield (Gross Rates Payable less net cost of Transition)** | 22,512 | 22,794 | 24,042 | | **Accounting adjustments** | | | | | Losses in collection (b) | 90 | 221 | 298 | | Losses on appeal | 1,745 | 770 | 486 | | Interest payable | 2 | - | - | | Deferrals | 60 | - | - | | **Total cost of accounting adjustments** | 1,835 | 932 | 784 | | **Other deductions from collectable rates (c)** | 128 | 214 | 95 | | **Disregarded Amounts** | | | | | Amounts retained in respect of Designated Areas | 4 | 15 | 22 | | Amounts retained in respect of Renewable Energy schemes | 4 | 22 | 20 | | **Total Disregarded Amounts** | 7 | 38 | 42 | | **Non-domestic rating income from rates retention scheme (Net Rates Yield less Accounting adjustments, Other deductions & Disregarded amounts) for year** | 20,541 | 21,610 | 23,121 |

Source: Outturn data are taken from auditor confirmed NNDR3 forms, forecast data are taken from NNDR1 forms.

(a) No transitional relief allowed in 2015-16 or 2016-17 (b) Losses in collection - write offs are not included in the Total cost of Accounting Adjustments (c) Other deductions from collectable rates includes an allowance for cost of collection & legal costs, a special authority deduction for the City of London, and the net cost of transitional protection payments made to authorities to reverse the effects of transitional arrangements. Table 2.5c: Cost of reliefs from non-domestic rates: 2013-14 to 2015-16

| MANDATORY RELIEFS | Outturn | £ million | Forecast | £ million | |-------------------|---------|-----------|----------|-----------| | | 2013-14 | 2014-15 | 2015-16 | | | Small Business Rate Relief | | | | | | In respect of current year | | | | | | Relief provided in year | 986 | 1,061 | 1,072 | | | Additional yield generated from the small business supplement | 447 | 543 | 633 | | | Net cost of small business rate relief in respect of current year | 539 | 518 | 439 | | | Net cost of small business rate relief in respect of previous years | 52 | 62 | - | | | Net cost of small business rate relief | 591 | 580 | 439 | | | Other Mandatory reliefs | | | | | | In respect of current year | | | | | | Charitable occupation | 1,391 | 1,476 | 1,511 | | | Community Amateur Sports Clubs (CASCs) | 18 | 19 | 20 | | | Rural rate relief | 6 | 6 | 6 | | | Partially occupied hereditaments | 34 | 32 | 31 | | | Empty premises | 988 | 947 | 846 | | | Total other mandatory relief in respect of current year | 2,438 | 2,480 | 2,413 | | | Other mandatory relief in respect of previous years | 14 | -9 | - | | | Changes as a result of local estimates of growth or decline in mandatory relief | - | - | 71 | | | Total cost of other mandatory relief | 2,452 | 2,471 | 2,485 | | | Total cost of mandatory relief | 3,042 | 3,051 | 2,923 | | | DISCRETIONARY RELIEFS | | | | | | In respect of current year | | | | | | Charitable occupation | 43 | 44 | 44 | | | Non-profit making bodies | 35 | 36 | 37 | | | Community Amateur Sports Clubs (CASCs) | 1 | 1 | 1 | | | Rural rate relief | 3 | 3 | 3 | | | Small rural businesses | 2 | 2 | 2 | | | Other relief awarded under s47 | 8 | 12 | 15 | | | Hardship relief | 3 | 3 | - | | | Total discretionary relief in respect of current year | 95 | 100 | 101 | | | Discretionary relief in respect of previous years | 1 | 2 | - | | | Discretionary reliefs funded through Section 31 grants | | | | | | "New Empty" properties | 1 | 4 | 9 | | | "Long term empty" properties | - | 4 | 11 | | | Retail relief | - | 196 | 284 | | | Flooding relief | 3 | 1 | - | | | In lieu of Transitional relief | | | | | | Total cost of discretionary reliefs funded through S31 grant | 4 | 205 | 303 | | | Discretionary relief funded through S31 grants in respect of previous years | - | 5 | - | | | Changes as a result of local estimates of growth or decline in discretionary relief | - | - | 9 | | | Total cost of discretionary relief | 100 | 312 | 414 | | | TOTAL COST OF ALL RELIEFS | 3,142 | 3,363 | 3,337 | |

Source: Outturn data are taken from auditor confirmed NNDR3 forms, forecast data are taken from NNDR1 forms (a) Data for 2013-14 also include reliefs granted (or recouped for previous awards made in error) in respect of previous years Council tax and Non Domestic rates collection

2.5.11. The collection of council tax and non-domestic rates doesn’t stop at the end of March; authorities will continue to attempt to collect the outstanding amounts until such times that they make a decision that it is no longer practical, or cost effective to try to collect it. Table 2.5d shows the amount of council tax and non-domestic rates collected in 2010-11 to 2014-15 irrespective of the year to which it relates.

| Year | Receipts of council taxes | Receipts of non-domestic rates | |------------|---------------------------|--------------------------------| | | In respect of the billing year | In respect of previous years (a) | In respect of subsequent billing year | Total receipts collected in financial year | In respect of the billing year | In respect of previous years (a) | In respect of subsequent billing year | Total receipts collected in financial year | | 2010–11 | 21,574 | 391 | 341 | 22,306 | 19,382 | -493 | 302 | 19,192 | | 2011–12 | 21,761 | 393 | 342 | 22,496 | 20,568 | -131 | 309 | 20,746 | | 2012–13 | 22,053 | 392 | 314 | 22,759 | 21,590 | -253 | 295 | 21,632 | | 2013–14 | 23,087 | 399 | 362 | 23,848 | 22,434 | -195 | 341 | 22,580 | | 2014–15 | 23,709 | 457 | 392 | 24,558 | 22,797 | -291 | 362 | 22,868 |

Source: QRC4

(a) A negative figure indicates that local authorities repaid more than they collected in respect of previous years. This is usually down to

2.5.12. The in-year collection rate is the amount received by 31 March of the year in question of that financial year's council tax and non-domestic rates shown as a percentage of the net collectable debit in respect of that year's council tax or non-domestic rates. In other words it is how much the local authority collected by 31 March of the local tax they would have collected if everyone liable had paid what they were supposed to. Table 2.5e shows the in-year collection rates for England since 2010-11.

| Year | % of total collected | |------------|----------------------| | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | | Council tax| 97.3 | 97.3 | 97.4 | 97.0 | 97.0 | | Non-domestic rates | 98.0 | 97.8 | 97.7 | 97.9 | 98.1 |

Source: QRC4

2.5.13. It includes prepayments made in the previous year in respect of the current year but it does not include prepayments made in the current year in respect of future years nor does it include the payment of any arrears. The collection of council tax and non-domestic rates continue once the financial year to which they relate has ended; this means that the final collection rate achieved is somewhere between the figures shown and 100 per cent. CHAPTER 3

How is the money spent? – Revenue expenditure

3.1. Summary of revenue expenditure

3.1.1. Revenue spending by local authorities is mainly for meeting employee costs, such as the salaries of staff; procurement costs, such as transport, fuel and building maintenance; levies paid to other local authorities which provide a service (for example, a metropolitan district pays a waste disposal authority); payment of awards/benefits on behalf of central government (for example, mandatory rent allowances) and recharges to other accounts.

3.1.2. Such spending is often referred to as current or revenue expenditure, in order to distinguish it from capital spending. However, the terms current expenditure and revenue expenditure also have particular meanings in the context of local government finance.

3.1.3. Further statistics about revenue expenditure in England that is summarised in this chapter can be found via https://www.gov.uk/government/collections/local-authority-revenue-expenditure-and-financing

3.2. General Fund Revenue Account expenditure definitions

3.2.1. Total current expenditure is the cost of running local authority services within the financial year. This expenditure is offset by income from sales, fees and charges and other (non-grant) income, which gives total net current expenditure. Net current expenditure includes that expenditure financed by specific government grants within and outside Aggregate External Finance (AEF).

3.2.2. Revenue expenditure is equal to net current expenditure plus capital financing costs and a few minor adjustments, but excluding expenditure funded by grants outside AEF and income from interest receipts. The sum of government grants, redistributed non-domestic rates, and council tax does not normally exactly equal revenue expenditure because of the use of reserves.

3.2.3. Net revenue expenditure is revenue expenditure, excluding that funded by all specific grants inside AEF, and excluding the Local Services Support Grant. Police Grant is not included in this. This represents an authority’s budget requirement and use of reserves.

### Table 3.2a: General fund revenue account: Net Current Expenditure at outturn 2010-11 to 2014-15 and budget 2015-16

| | £ million | |----------------------|-----------| | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | | **Education (a), (b)** | 45,283 | 40,219 | 37,134 | 35,881 | 34,477 | 34,976 | | **Highways and transport** | 5,669 | 5,381 | 4,823 | 4,795 | 4,537 | 4,922 | | **Social care (c)** | 21,062 | 21,160 | 21,136 | 21,480 | 22,587 | 21,779 | | of which: | | | | | | | | Children's Social Care | 6,654 | 6,423 | 6,612 | 6,915 | 8,091 | 7,698 | | Adult Social Care | 14,408 | 14,738 | 14,524 | 14,565 | 14,496 | 14,081 | | **Public Health (d)** | 2,484 | 2,102 | 1,996 | 2,025 | 1,852 | 1,742 | | **Housing (excluding Housing Revenue Account) (e)** | 10,676 | 9,742 | 9,407 | 9,176 | 8,915 | 8,895 | | Cultural, environmental and planning | 11,948 | 11,650 | 11,337 | 10,920 | 10,889 | 10,951 | | **Police** | 2,165 | 2,118 | 2,119 | 2,089 | 2,045 | 2,080 | | **Fire & rescue** | 3,226 | 2,952 | 3,002 | 2,845 | 3,068 | 3,112 | | **Central services** | 118 | 112 | 118 | 91 | 92 | 281 | | **Other Services and Precepts and Levies** | 118 | 112 | 118 | 91 | 92 | 281 | | **Total Service Expenditure** | 102,631 | 95,435 | 91,072 | 91,809 | 91,199 | 91,859 | | **Housing Benefits** | 18,548 | 19,766 | 20,748 | 20,982 | 21,113 | 21,103 | | **Parish Precepts and Levies (f)** | 411 | 418 | 434 | 423 | 436 | 465 | | **Trading Account Adjustments and Other Adjustments (g)** | -413 | -406 | -312 | -329 | -344 | -339 | | **Total Net Current Expenditure (a), (c), (d)** | 121,177 | 115,213 | 111,941 | 112,885 | 112,404 | 113,089 |

Source: Revenue Summary (RS) returns 2009-10 to 2014-15, Revenue Account (RA) budget return 2015-16.

Since 2010-11 produced on a non-IAS19 and PFI off-balance sheet basis (IAS19 replaces the previous FRS17 accounting system). Service spend only includes spend on specific services, in previous years this included benefits and other levies related to each service.

(a) Includes mandatory student awards and inter-authority education recoupment. These were last paid in 2010-11.

(b) Education expenditure since 2011-12 are not comparable to previous years due to a number of schools changing their status to become academies, which are centrally funded rather than funded by local authorities.

(c) Adult social care for 2011-12 (and therefore Social care and Net Current Expenditure) is not comparable to previous years due to a change in responsibility between NHS and local government for adults with learning disabilities, where from 1st April 2011 the transfer of funding was made directly from Department for Health to LA’s, where they now receive a new non-ring fenced grant which amounts to £1.2 billion in 2011-12.

(d) Net Current Expenditure in 2013-14 is not comparable to previous years due to a transfer of Public Health duties to local authorities in 2013-14, following the Health and Social Care Act 2012.

(e) Includes all Housing Services (excluding Housing Revenue Account) data. This now excludes Housing Benefits payments (mandatory rent allowances, rent rebates granted to HRA tenants,) which were included in previous years. These are now identified separately.

(f) Includes ‘Parish Precepts’, ‘Integrated Transport Authority levy’, ‘Waste Disposal Authority levy’, ‘London Pensions Fund Authority levy’ and other levies

(g) Includes ‘External Trading Accounts’, ‘Internal Trading Accounts’, ‘Capital items accounted for in External Trading Accounts’, ‘Capital items accounted for in Internal Trading Accounts’, ‘Adjustments to net current expenditure’ and ‘Appropriations to/from Accumulated Absences Account’ Table 3.2a continued: General fund revenue account: Revenue Expenditure at outturn 2010-11 to 2014-15 and budget 2015-16

| | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | |----------------------|---------|---------|---------|---------|---------|---------| | **Total Net Current Expenditure** | 121,177 | 115,213 | 111,941 | 112,885 | 112,404 | 113,089 | | Capital financing | 4,135 | 4,639 | 4,348 | 4,468 | 4,528 | 4,463 | | Capital Expenditure charged to Revenue Account (CERA) | 2,598 | 2,915 | 1,307 | 2,778 | 3,010 | 1,320 | | Other non-current expenditure (a) | 4,308 | 4,332 | 4,337 | 149 | 165 | 87 | | Appropriations to (+)/ from(-) financial instruments adjustment account | 15 | -217 | 7 | -45 | 3 | -22 | | Appropriations to (+)/ from(-) unequal pay back pay account | - | -15 | 16 | 28 | 33 | 2 | | Private Finance Initiative (PFI) schemes - difference from service charge | 38 | 5 | 51 | 33 | 41 | 4 | | less Interest receipts | 663 | 860 | 815 | 839 | 865 | 793 | | less Specific grants outside AEF | 27,191 | 26,542 | 26,829 | 22,805 | 23,045 | 22,427 | | less Business rates supplement | 222 | 230 | 235 | 212 | 221 | 223 | | less Community Infrastructure Levy | - | - | 6 | 47 | 123 | 87 | | less Carbon Reduction Commitment | - | -31 | -27 | -26 | -13 | -25 | | Revenue Expenditure (Non-FRS17 / Non-IAS19) | 104,256 | 99,278 | 94,148 | 96,419 | 95,943 | 95,437 | | financed by: | | | | | | | | Reserves and Other | -1,172 | -2,427 | -2,461 | -2,249 | -664 | 2,225 | | Transfers and Adjustments (b) | 23 | 0 | 0 | 1 | 2 | -1 | | Appropriation to (-)/from (+) Reserves (excluding Pension Reserves) | -1,261 | -2,553 | -2,592 | -2,379 | -948 | 1,834 | | Other items | 65 | 126 | 131 | 130 | 282 | 392 | | Total Government Funding | 50,113 | 45,754 | 42,043 | 41,837 | 40,853 | 39,681 | | Specific grants inside AEF | 45,750 | 45,502 | 41,820 | 41,760 | 40,805 | 39,653 | | Area Based Grant (ABG) | 4,363 | - | - | - | - | - | | Local Services Support Grant | - | 253 | 223 | 77 | 48 | 28 | | Formula Grant (c) | 29,012 | 29,436 | 27,802 | 33,460 | 31,790 | 28,798 | | of which: | | | | | | | | Revenue Support Grant | 3,122 | 5,873 | 448 | 15,175 | 12,675 | 9,509 | | Redistributed non-domestic rates | 21,517 | 19,017 | 23,129 | - | - | - | | Retained Income from Rate Retention Scheme | - | - | - | 10,719 | 11,331 | 11,867 | | Police grant (d) | 4,374 | 4,546 | 4,224 | 7,565 | 7,784 | 7,421 | | General Greater London Authority Grant | 48 | 63 | 50 | - | - | - | | Council tax requirement | 26,254 | 26,451 | 26,715 | 23,371 | 23,964 | 24,734 |

Source: Revenue Summary (RS) returns 2009-10 to 2014-15, Revenue Account (RA) budget return 2015-16. Since 2010-11 produced on a non-IAS19 and PFI off-balance sheet basis (IAS19 replaces the previous FRS17 accounting system) (a) Includes: (i) gross expenditure on council tax benefit, (ii) discretionary non-domestic rate relief, (iii) flood defence payments to the environment agency, (iv) bad debt provision. (b) Includes inter-authority transfers in respect of reorganisation. (c) Formula Grant in 2013-14 is not comparable to previous years due to a change in business rates, whereby authorities now retain a share of business rates and keep the growth on that share, thereby giving them a significant financial incentive to help deliver growth locally. This will have a significant effect on the amount of Revenue Support Grant each authority receives in 2013-14. (d) Police authorities, which are not part of the rates retention scheme, received this funding through Police Grant from 2013-14. 3.3. **Labour, goods and services purchased**

3.3.1. Revenue expenditure can also be analysed in terms of the labour, goods and services purchased by local authorities.

3.3.2. A sample of local authorities completes the Subjective Analysis Return (SAR). This is a more detailed return showing how net current expenditure is broken down between pay and the procurement of goods and services. Pay is analysed to show the major pay negotiating groups (see Chapter 6). Procurement of goods and services is analysed to show goods and services purchased directly and services provided by external contractors or internal trading services.

3.3.3 **Table 3.3a** shows this analysis from 2010-11 onwards. Total expenditure on pay and the procurement of goods and services is consistent with *Revenue Outturn* data, but has been adjusted to exclude double counting of expenditure that has been recharged between service blocks within the General Fund Revenue Account, or between one local authority and another. Discretionary transfer payments have also been excluded.

| Table 3.3a: Labour, goods and services 2010-11 to 2014-15 | |----------------------------------------------------------| | **%** | £ million of total | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | | Teachers (a) | 20,457 | 18,155 | 15,970 | 14,109 | 13,700 | 26 | | Police | 10,616 | 10,439 | 9,967 | 9,492 | 6,633 | 12 | | Firefighters | 1,468 | 1,454 | 1,400 | 1,509 | 1,282 | 2 | | Other local government | 30,243 | 27,547 | 26,628 | 25,985 | 29,435 | 55 | | Pay related costs | 2,751 | 2,599 | 2,171 | 2,805 | 2,085 | 4 | | Total employee expenditure | 65,534 | 60,195 | 56,136 | 53,899 | 53,214 | 100 | | Premises related expenditure | 7,334 | 6,724 | 6,716 | 6,349 | ... | | Transport expenditure | 2,975 | 2,829 | 2,741 | 2,830 | ... | | Supplies and services expenditure | 19,060 | 17,822 | 17,507 | 17,973 | ... | | External contractors (b) | 28,970 | 27,156 | 27,224 | 30,232 | ... | | Internal trading services | 2,222 | 2,075 | 1,781 | 1,239 | ... | | Other (c) | 881 | 737 | 1,114 | 2,033 | ... | | Total procurement expenditure | 61,442 | 57,344 | 57,082 | 60,654 | ... | | Total employee and procurement expenditure | 126,976 | 117,538 | 113,218 | 114,554 | ... |

Source: Subjective Analysis Returns (SAR) to 2014-15

Since 2010-11 this data has been produced on a non-IAS19 and PFI off-balance sheet basis (IAS19 replaces the previous FRS17 accounting system).

(a) The number of teachers has been decreasing due to schools moving to academy status, where academies are directly funded by central government and are independent of local government control.

(b) Excludes expenditure on inter local authority recoupment (RO1).

(c) Excludes expenditure on concessionary fares and administration and support services recharges (RO2, RO6). 3.4. **Revenue reserves**

3.4.1. Revenue reserves are an accumulation of income, which can be used to finance future spending and to provide working balances. Authorities hold reserves for a variety of reasons including:

- to meet unexpected calls on their resources, like the consequences of flooding or of snow and ice on roads,
- to act as a cushion against uneven cash flows,
- to avoid the need for temporary borrowing,
- to build up resources to cover certain or probable future liabilities.

3.4.2. Planning for unexpected expenditure is an important element of authorities' risk management strategies, and decisions on the amount held for this reason should follow a careful assessment of risks faced by an authority and other means by which the risks can be mitigated. **Table 3.4a** shows the level and use of revenue reserves.

3.4.3. There are four main types of revenue reserves:

- **schools' reserves**, which represent amounts retained by schools out of their delegated budgets; schools hold these reserves for the same reasons as local authorities,
- **public health reserves**, which represent amount retained by local authorities out of their public health budgets and can only be used for public health expenditure,
- **other earmarked reserves**, which have been set aside for other particular purposes,
- **unallocated reserves**, which are intended for general contingencies.

3.4.4. In presenting how much finance a local authority has in reserve at any point in time it is normal to exclude schools' reserves as they are not immediately available to a local authority. Table 3.4a: Level and use of Revenue Reserves(a), 31 March 2011 - 31 March 2015

| Year | Revenue expenditure (a) | Schools | Public Health | Other earmarked | Unallocated | Non-ringfenced reserves | Total Revenue reserves | % change | Revenue reserves as a % of revenue expenditure | |--------|-------------------------|---------|---------------|-----------------|-------------|-------------------------|------------------------|----------|-----------------------------------------------| | 2010 | 103,276 | 1,812 | - | 9,223 | 3,509 | 12,732 | 14,544 | | | | 2011 | 104,256 | 2,057 | - | 10,503 | 3,762 | 14,265 | 16,322 | 12.2 | 2.0 - 13.7 | | 2012 | 99,278 | 2,414 | - | 12,412 | 4,086 | 16,498 | 18,913 | 15.9 | 2.4 - 16.6 | | 2013 | 94,148 | 2,372 | - | 14,886 | 4,537 | 19,423 | 21,795 | 15.2 | 2.5 - 20.6 | | 2014 | 96,419 | 2,378 | 207 | 17,084 | 4,299 | 21,383 | 23,967 | 10.0 | 2.5 0.2 22.2 | | 2015 | 95,943 | 2,414 | 320 | 17,971 | 4,483 | 22,454 | 25,188 | 5.1 | 2.5 0.3 23.4 |

Source: Revenue Summary (RS) return This table shows end year reserves levels only and compares these with the end years of previous financial year. Previously this table included start positions rather than end positions. (a) Revenue expenditure is on a non International Accounting Standard 19 (IAS19) and PFI "off balance" sheet basis. This figure represents the Revenue Expenditure for the full financial year. For example, Revenue expenditure for 2015 is outturn 2014-15.

3.5 External trading services

3.5.1 Local authorities operate a variety of trading services, which are either defined under general or local Acts of Parliament or by custom. They are services of a commercial nature which are substantially financed by charges made to recipients of the services. Table 3.5a shows details of the internal and external trading accounts.

Table 3.5a: Trading Account Services(a), 2010-11 to 2014-15

| Year | Internal Trading Accounts | External Trading Accounts | TOTAL Trading Accounts | |--------|---------------------------|---------------------------|------------------------| | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 (b) | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 (b) | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 (b) | | | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | | Total Expenditure | 3,665 | 3,405 | 3,056 | 2,596 | ... | 838 | 815 | 791 | 773 | ... | 4,503 | 4,220 | 3,847 | 3,369 | ... | | Income | 3,707 | 3,480 | 3,126 | 2,650 | ... | 1,131 | 1,131 | 1,092 | 1,081 | ... | 4,838 | 4,611 | 4,218 | 3,732 | ... | | Net surplus/deficit of Internal Trading Account | 87 | 18 | 25 | 35 | 8 | -127 | -165 | -205 | -229 | -186 | -40 | -147 | -180 | -194 | -178 |

Source: Trading Account Services Returns (TSR) to 2014-15 (a) All revenue data is collected on a non International Accounting Standard 19 (IAS19) and PFI "off balance" sheet basis. (b) Since 2014-15 we have only collected the net surplus / deficit of the internal and external trading accounts.

3.5.2 External trading services are typically organisations funded mainly by sales outside the authority. These include civic halls and theatres, markets, industrial estates, tolled bridges, roads, ferries and tunnels. Their receipts are conditional on actual work done. They differ from public corporations in that they do not have a full commercial style set of accounts, or autonomy from the local authority in day to day business operations in their legal identity and financial transactions. An operating profit on the Trading Accounts Services (TSR) return is shown as a negative on the expenditure form.

3.6 Housing Revenue Account (HRA)

3.6.1 The Housing Revenue Account (HRA) is a record of revenue expenditure and income relating to an authority’s own housing stock and dates back to the Housing Act 1935.

3.6.2 Most other local authority services are funded through council tax and central government support for the benefit of all local taxpayers. However housing is provided directly to a relatively small sub-group of local residents and council tenants and funded by the rents they pay and by central government subsidy.

3.6.3 The HRA is a ring-fenced account. The ring-fence, introduced in the Local Government and Housing Act 1989, ensures that rents paid by local authority tenants make a fair contribution to the cost of providing the housing service. Rent levels can therefore not be subsidised by increases in the council tax and equally, local authorities are prevented from increasing rents in order to keep council tax levels down.

3.6.1 In March 2012 the HRA subsidy system was abolished and replaced with a self-financing system. This involved transfers of assets and liabilities between central and local government. The net result of these transactions was that local government borrowing increased by approximately £8.1 billion in March 2012 to cover the housing stock they took over.

3.6.2 Details of the income and expenditure on the HRA since 2010-11 can be found in Table 3.6a. | Table 3.6a: Housing Revenue Account income and expenditure, 2010-11 to 2014-15, and budget 2015-16 | |---------------------------------------------------------------| | **Expenditure** | | Supervision and management: general | £ million of total | | 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2014-15 | | (E) (B) | | Supervision and management: special | 1,739 1,710 1,761 1,878 1,819 1,957 22% | | Repairs (including transfers to the repairs account) | 1,686 1,535 1,720 1,772 1,844 1,797 23% | | Expenditure for capital purposes | 281 324 428 618 708 1,113 9% | | Debt charges (b) | 3,956 2,904 1,161 1,293 1,187 1,182 15% | | Interest payable and similar charges | - - 1,154 988 970 956 12% | | Transfers to GF or MRR (a) | 908 1,013 1,022 1,084 1,013 938 12% | | Other expenditure | 220 652 121 122 123 121 2% | | **Total expenditure** | 9,422 8,776 7,854 8,219 8,152 8,671 100% | | **Income** | | Rents from dwellings (b) | £ million of total | | 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2014-15 | | (E) (B) | | Rents other than dwellings | 6,148 6,412 6,743 7,043 7,286 7,310 84% | | Heating and other services | 169 171 174 171 153 155 2% | | Interest income | 616 613 636 687 699 635 8% | | Government subsidy | 694 1,449 30 54 48 17 1% | | LA subsidy | 414 309 231 289 321 149 4% | | Transfers from GF or MRR (a) | 46 18 - - - - | | Other income | 752 965 140 144 148 148 2% | | **Total income** | 8,838 9,937 8,165 8,512 8,700 8,553 100% |

Source: HRA Subsidy claims to 2011-12 (estimates for 2011-12), Revenue Outturn (RO4) return from 2012-13, Revenue Account (RA) budget return 2015-16.

(a) 'General Fund Revenue Account' and 'Major Repairs Reserve' (b) Includes Charges to the HRA for debt repayment or non-interest charges in respect of credit arrangements (including on balance sheet PFI schemes and 'Debt management costs' (c) Includes Direct Interest payable and similar charges including amortisation of premiums and discounts and Provision for bad debts (d) Gross (i.e. including rents met by rebates) CHAPTER 4

How is the money spent? – Capital expenditure

4.1. Capital spending and receipts

4.1.1. Capital spending by local authorities is mainly for buying, constructing or improving physical assets such as - buildings – schools, houses, libraries, museums, police and fire stations etc.; land – for development, roads, playing fields etc.; and vehicles, plant and machinery – including street lighting, road signs etc.

4.1.2. It also includes grants and advances made to the private sector or the rest of the public sector for capital purposes, such as advances to Registered Social Landlords.

4.1.3. Authorities finance this spending in a number of ways, including use of their own revenue funds, capital receipts, borrowing or grants and contributions from elsewhere.

4.1.4. Authorities do not need prior government approval to finance capital spending by borrowing or credit. They operate under the prudential capital finance system and, although they receive central government support for a major part of their capital programmes, are free to borrow to fund additional investment as long as they can prudently afford to service the debt.

4.1.5. A capital receipt is the money received by a local authority from the sale of a capital asset, such as a council house, or from the repayment of a grant or loan made by the authority to someone else to use for capital spending.

4.1.6. Local authorities are required to set aside any part of a receipt, though authorities are still free to earmark all or some of their receipts for debt redemption if they wish. However, a pooling system is in place requiring authorities to pay to the government a proportion of their capital receipts from the sale of housing land and dwellings. Large and Small Scale Voluntary Transfers are excluded from this scheme.

4.1.7. Further statistics on capital expenditure can be found on-line at https://www.gov.uk/government/collections/local-authority-capital-expenditure-receipts-and-financing

4.1.8. Recent trends in capital expenditure by type of spending are shown in Table 4.1a. Table 4.1b provides details of capital expenditure by service. | Table 4.1a: Capital expenditure by economic category | |-----------------------------------------------| | **£ million** | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | | Expenditure: | | | | | | | | Acquisition of land and existing buildings and works | 1,043 | 721 | 823 | 1,191 | 1,021 | 1,087 | | New construction and conversion | 14,777 | 13,300 | 11,494 | 11,650 | 12,942 | 18,799 | | Vehicles, plant equipment and machinery | 1,520 | 1,426 | 1,210 | 1,231 | 1,310 | 1,613 | | Intangible assets | 205 | 221 | 178 | 209 | 226 | 270 | | **Total expenditure on fixed assets** | 17,544 | 15,668 | 13,705 | 14,281 | 15,500 | 21,768 | | Grants, loans and other financial assistance | 5,148 | 4,166 | 4,002 | 3,770 | 4,757 | 6,480 | | Acquisition of share and loan capital | 454 | 198 | 1,225 | 1,611 | 1,635 | 54 | | **Total capital expenditure** | 23,146 | 20,032 | 18,931 | 19,662 | 21,891 | 28,303 | | of which GLA: | 4,969 | 3,431 | 4,120 | 4,487 | 3,470 | 5,276 | | Expenditure by virtue of a section 16(2)(b) direction | 239 | 263 | 111 | 10 | 1 | 8 | | Notional capital receipts set aside and Large Scale Voluntary Transfer levy | 0 | 16 | 0 | 0 | 0 | 0 | | One-off HRA self-financing determination payment: | 13,295 | | | | | | | **Total expenditure and other transactions** | 23,385 | 33,606 | 19,042 | 19,671 | 21,893 | 28,310 | | **Total expenditure excl HRA self-financing determination payment** | 20,311 | | | | | | | Receipts: | | | | | | | | Sales of fixed assets | 1,434 | 1,923 | 2,033 | 2,426 | 2,876 | 3,048 | | Intangible fixed assets | 8 | 21 | 9 | 8 | 35 | 40 | | Repayments of grants and advances | 36 | 43 | 76 | 40 | 72 | 48 | | Disposal of investments including share and loan capital | 20 | 27 | 7 | 6 | 13 | 23 | | One-off HRA self-financing determination & premium | - | 6,711 | | | | | | **Total capital receipts** | 1,498 | 8,724 | 2,124 | 2,481 | 2,996 | 3,159 | | **Total receipts excl HRA self-financing determination & premium** | 2,014 | | | | | |

Source: COR/CER returns

(a) Expenditure which does not fall within the definition of expenditure for capital purposes, but is treated as capital expenditure by a direction under section 16(2)(b) of the Local Government Act 2003

(b) GLA’s grants and loans total £2.9 billion, including GLA’s £1 billion contribution to Crossrail.

(c) Reflects a one-off loan within the TfL Group of £1.6bn to London Underground financed by an equivalent loan from Tube lines

(d) Local authorities subject to the transactions associated with the HRA Self-financing Determinations are required to include the determination in relation to expenditure or receipts and also the financing if applicable. This is a one-off exercise for 2011-12 and figures are provided both inclusive and exclusive of this transaction.

(e) This reflects reallocation of expenditure by TfL as part of year end process of reconciling funding to its subsidiaries.

(f) The reason for a significant increase in acquisition of share or loan capital is the higher levels of spend now being witnessed on the Crossrail

(g) This reflects the disposal of assets by the Greater London Authority (GLA) Table 4.1b: Local authority capital expenditure by service: England: 2010-11 to 2015-16

| Service | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | |--------------------------------|---------|---------|---------|---------|---------|---------| | Education | 6,107 | 5,495 | 4,528 | 3,742 | 3,480 | 4,218 | | Highways & transport | 7,943 | 6,574 | 6,046 | 6,615 | 7,792 | 9,016 | | of which GLA | 4,520 | 3,137 | 3,016 | 3,502 | 3,802 | 4,151 | | Social services | 312 | 253 | 207 | 343 | 264 | 490 | | Public health(a) | ... | ... | ... | 4 | 7 | 9 | | Housing | 4,063 | 3,274 | 3,731 | 3,969 | 4,807 | 6,466 | | of which GLA | 0 | 0 | 652 | 414 | 676 | 557 | | Culture & related services | 1,147 | 1,102 | 877 | 830 | 957 | 1,410 | | Environmental services | 531 | 488 | 526 | 581 | 680 | 926 | | Planning & development services| 833 | 653 | 879 | 1,129 | 1,467 | 2,254 | | Police | 602 | 538 | 500 | 481 | 546 | 818 | | Fire & rescue | 195 | 136 | 172 | 178 | 192 | 338 | | Central services | 1,110 | 1,160 | 1,264 | 1,325 | 1,375 | 1,925 | | Trading services | 304 | 358 | 201 | 464 | 323 | 433 | | Total capital expenditure | 23,146 | 20,032 | 18,931 | 19,661 | 21,891 | 28,303 |

(a) Public health grant is being provided in 2013-14 to give local authorities the funding needed to discharge their new public health responsibilities (b) GLA incurring additional housing expenditure in 2014-15 compared to 2013-14 primarily in relation to affordable housing, the Mayor’s housing covenant and decent homes

4.2. Capital financing

4.2.1. Capital spending is financed by:

- grants received from government departments for any purpose, but mainly given for schools, transport, housing or regeneration work; contributions or grants from elsewhere, including the National Lottery and Non-Departmental Public Bodies such as Sports England, English Heritage and Natural England. These can also come from private sector partners, for example for access roads or traffic management schemes;

- capital receipts (that is proceeds from the sale of land, buildings or other fixed assets);

- revenue resources – either the General Fund Revenue Account, the Housing Revenue Account (HRA) or the Major Repairs Reserve although an authority cannot charge council tenants for spending on general services, or spending on council houses to local taxpayers;

- self-financed borrowing within limits of affordability, having regard to the 2003 Act and the CIPFA Prudential Code.

4.2.2. Table 4.2a provides details of capital expenditure financing from 2010-11 to 2015-16. | Table 4.2a: Financing of capital expenditure | £ million | |-------------------------------------------|----------| | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | | Central government grants | 8,063 | 7,170 | 8,481 | 7,483 | 8,520 | 9,992 | | EU structural funds grants | 38 | 77 | 55 | 57 | 132 | 104 | | Grants and contributions from private developers and from leaseholders etc | 634 | 747 | 693 | 750 | 727 | 1,165 | | Grants and contributions from NDPBs (b) | 753 | 522 | 442 | 443 | 564 | 510 | | National lottery grants | 104 | 121 | 67 | 49 | 53 | 93 | | Use of capital receipts | 1,409 | 1,647 | 1,294 | 1,516 | 1,879 | 3,086 | | Revenue financing of capital expenditure of which: | 3,984 | 4,504 | 3,167 | 4,920 | 5,241 | 5,252 | | Housing Revenue Account (CERA) | 235 | 324 | 466 | 578 | 686 | 1,402 | | Major Repairs Reserve | 1,069 | 1,160 | 1,259 | 1,491 | 1,526 | 1,683 | | General Fund (CERA) | 2,680 | 3,020 | 1,442 | 2,851 | 3,029 | 2,168 | | Capital expenditure financed by borrowing/credit of which: | 8,399 | 18,819 | 4,842 | 4,454 | 4,777 | 8,107 | | SCE(R) Single Capital Pot (c) | 1,581 | 338 | 88 | 70 | 0 | 1 | | SCE(R) Separate Programme Element (c) | 484 | 74 | 30 | 8 | 0 | 0 | | Other borrowing & credit arrangements not supported by central government (e) | 6,335 | 18,406 | 4,724 | 4,376 | 4,777 | 8,106 | | Total | 23,385 | 33,606 | 19,042 | 19,671 | 21,893 | 28,310 |

(a) There is a discontinuity from 2010-11 owing to a change in the treatment of expenditure by GLA. Previously this was recorded as 'Central government grant' but for 2011-12 it has been recorded as CERA to align with figures received on the Revenue Outturn. (b) Non-Departmental Public Bodies, organisations that are not government departments but which have a role in the processes of national government, such as Sport England, English Heritage and the Natural England. (c) Supported capital expenditure (SCE) financed by borrowing attracted central government support was discontinued as of March 31 2011. A residue of schemes in 2011-12 and 2012-13 continue to be financed in reliance of supported borrowing from earlier years. (d) It is estimated that approximately £13 billion is associated with the financing of the HRA self-financing determination payment. (e) The Prudential System, which came into effect on 1 April 2004, allows local authorities to raise finance for capital expenditure without Government consent - where they can afford to service the debt without extra Government support. CHAPTER 5

Borrowing and Investments

5.1. Outstanding debt and holdings of investments

5.1.1. Local authorities have the power to determine how much debt they can take on to deliver services. Each local authority sets its own debt limit. In doing so, the authority will need to be confident that it can service the debt, without the costs of doing so adversely impacting on service delivery.

5.1.2. Outstanding debt includes temporary borrowing, issued with a term of less than one year, for the purpose of managing cash flow, and longer-term borrowing, issued with a term greater than one year, taken out to finance capital projects.

5.1.3. Table 5.1a outlines the total borrowing figures across the past five years from 2010-11 to 2014-15. These are broken down by borrowing source. Separate totals for Transport for London (TFL) and the Greater London Authority (GLA) have been provided as these two authorities manage funds for some of the largest capital investment programmes in the country, such as Crossrail. Borrowing to finance these projects contributes significantly to UK borrowing trends.

5.1.4. Table 5.1b shows the local authority investment levels as at the 31st March from 2010-11 to 2014-15.

5.1.5. Local authorities are permitted to invest their surplus funds to generate a return. However, certain types of investments that are considered too risky are prohibited.

5.1.6. The stock of local authority investments is the financial representation of local authorities' reserves, unused capital receipts and cash flow surpluses. Authorities that are net borrowers may use such resources to reduce their borrowing rather than hold them as investments.

5.1.7. Further statistics on Borrowing and Investments can be found on-line at https://www.gov.uk/government/collections/borrowing-and-investments-by-uk-local-authorities

### Table 5.1a: Local authority borrowing 2010-11 to 2014-15

| | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | |----------------------|---------|---------|---------|---------|---------| | **Temporary borrowing** | | | | | | | Banks | 98 | 55 | 54 | 54 | 51 | | Building societies | 121 | 4 | 0 | 0 | 4 | | Other financial intermediaries | 115 | 45 | 78 | 94 | 88 | | Public corporations | 139 | 77 | 54 | 42 | 57 | | Private non-financial corporations | 2 | 2 | 4 | 5 | 8 | | Central government | 1 | 1 | 2 | 5 | 0 | | Household sector | 28 | 25 | 38 | 17 | 13 | | Other sources | 2 | 36 | 36 | 40 | 48 | | **Total** | 506 | 245 | 265 | 257 | 270 | | **Longer-term borrowing** | | | | | | | Negotiable bonds | 594 | 1,494 | 1,901 | (R) 2,601 | (R) 3,106 | | Listed securities other than bonds | 806 | 2,226 | 2,059 | (R) 1,666 | (R) 1,727 | | Public Works Loan Board (a) | 41,989 | 49,977 | (R) 51,368 | (R) 51,181 | (R) 51,462 | | Banks | 9,418 | 9,325 | (R) 9,015 | 8,584 | 8,356 | | Building societies | 10 | 5 | 5 | 2 | 1 | | Other financial intermediaries | 216 | 301 | 300 | 332 | 435 | | Public corporations | 1 | 1 | 6 | 6 (R) | 9 | | Private non-financial corporations | 0 | 12 | 11 | 120 | 149 | | Central government | 4 | 3 | 7 | 22 | 35 | | Household sector | 5 | 4 | 3 | 4 | 3 | | Rest of the World | 2,852 | 3,654 | (R) 4,225 | 4,697 | 5,049 | | Other sources | 11 | 11 | 23 | 13 | 7 | | **Total** | 55,906 | 67,014 | (R) 68,923 | 69,228 | 70,339 | | **Total borrowing** | 56,412 | 67,260 | (R) 69,188 | 69,485 | 70,609 | | TFL and GLA (b) | 5,550 | (R) 8,472 | 9,993 | 11,105 | 11,805 | | **Total borrowing excluding TFL and GLA** | 50,862 | (R) 58,788 | (R) 59,196 | (R) 58,380 | (R) 58,804 |

Source: Monthly Borrowing (MB) and Quarterly Borrowing (QB) returns; Public Works Loan Board

(a) Reform of the Housing Revenue Account (HRA) saw net one-off borrowing of £8,100 million by Local Authorities from the Public Works Loan Board in March 2012

(b) Transport for London (TFL) and the Greater London Authority (GLA) figures are included as they contribute significantly to the overall change in borrowing each year

### Table 5.1b: Local authority investments 2010-11 to 2014-15

| | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | |----------------------|---------|---------|---------|---------|---------| | **Investments** | | | | | | | Deposits: banks | 13,370 | 12,592 | 14,908 | (R) 14,951 | (R) 12,863 | | Deposits: building societies | 1,823 | 1,738 | 1,856 | 2,022 | 2,706 | | Treasury bills | 1,028 | 1,141 | 1,029 | 1,772 | 2,004 | | Certificates of deposit: banks | 0 | 94 | 133 | 377 | 965 | | Certificates of deposit: building societies | 1 | 14 | 0 | 8 | 6 | | British Government (Gilt-edge) securities | 135 | 887 | 206 | 1,227 | 597 | | Other financial intermediaries | 46 | 30 | 12 | 23 | 46 | | Public corporations | 156 | 153 | 156 | 200 | 285 | | Debt Management Account deposit facility | 253 (R) | 435 (R) | 336 (R) | 486 (R) | 918 | | Money market funds | 2,722 | 3,990 | 3,445 | 3,634 | 4,545 | | Externally managed funds | 1,803 | 1,473 | 1,492 | 1,399 | 1,568 | | Other investments (a) | 393 (R) | 229 (R) | 2,616 (R) | 2,722 (R) | 3,520 | | **Total investments** | 21,731 (R) | 22,774 (R) | 26,189 (R) | 28,823 (R) | 30,023 |

Source: Monthly Borrowing (MB) and Quarterly Borrowing (QB) returns, Debt Management Office

(a) Includes investments made with public corporations, other financial institutions and British Government securities. £2.3 billion of the increase in 2012-13 was due to investments made by GLA for Crossrail. 5.2. **Borrowing and investment transactions**

5.2.1. New borrowing and drawing down of investments are ways of accessing funds. New borrowing is a major way of financing capital spending. Funds that are received as income or capital receipts, but are not needed for immediate expenditure, may be invested or used to redeem debt.

5.2.2. Local government Net Cash Requirement summarises changes in local authority borrowing less change in investments. When Net Cash Requirement is positive, local authorities are increasing their borrowing and/or reducing their investments. When Net Cash Requirement is negative, local authorities are reducing their borrowing and/or increasing their investments.

5.2.3. **Table 5.2a** shows the change in borrowing, investments and net cash requirement across local government from 2010-11 to 2014-15.

| Table 5.2a: Local Government Net Cash Requirement | £ million | |--------------------------------------------------|-----------| | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | | Annual change in temporary borrowing | -211 | -261 | 20 | -8 | 13 | | Annual change in longer-term borrowing (a) | 2,195 | 11,109 | (R) 1,909 | 305 (R) | 1,111 | | **Total** | **1,984** | **10,848 (R)** | **1,928 (R)** | **297 (R)** | **1,124** | | less annual change in investments | 1,178 | 1,043 | (R) 3,415 | (R) 2,634 | (R) 1,200 | | **Net Cash Requirement** | **806** | **9,805 (R)** | **-1,486 (R)** | **-2,337 (R)** | **-76** |

Source: Monthly (MB) and Quarterly Borrowing (QB) returns and the PWLB

(a) In March 2012 English local authorities borrowed £8.1bn from the Public Works Loan Board (PWLB) as part of the settlement associated with the reform of the Housing Revenue Account. CHAPTER 6

Local government pay and pensions

6.1. Local government employment

6.1.1. Local government is collectively one of the largest employers in England, employing over 1 million full time equivalent staff (FTEs). Pay negotiating groups are responsible for negotiating, amongst other aspects, the pay rewards for employees in their group and cover the majority of local government employees. These groups are Teachers, Police, Police Support Staff, Firefighters; and Other Local Government Staff. For the purposes of this publication, police and police support staff are treated as one group.

6.1.2. The group classified as ‘Other Local Government Staff’ is covered by a number of separate negotiating bodies and includes fire support staff, all non-teachers working in education including teaching assistants, and all other local government employees such as social workers, planners, chief executives, chief officers and other administrative staff.

6.2. Local government pay expenditure

6.2.1. In 2014-15, local government employee expenditure accounted for 45 per cent of all local government service expenditure (gross of income) and was the single largest area of spending for local government. Employee expenditure includes pay, employers’ National Insurance and pension contributions, location allowances and other employee related costs such as training and recruitment. Table 6.2a illustrates levels of local government pay since 2010-11 for each of the main pay negotiating groups, and Table 6.2b shows employee expenditure as a proportion of service expenditure for each of the service areas for 2014-15.

| Table 6.2a: Local government pay by pay negotiating group 2010-11 to 2014-15 | |-----------------------------|-----------------------------|-----------------------------|-----------------------------|-----------------------------|-----------------------------| | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | £ billion 2014-15 | Percentage of Employee Expenditure 2014-15 | | Teachers | 16.9 | 15.0 | 13.2 | 11.8 | 11.5 | 22% | | Police and Police Support Staff | 7.8 | 7.5 | 7.3 | 7.1 | 7.0 | 13% | | Firefighters | 1.1 | 1.1 | 1.1 | 1.0 | 1.0 | 2% | | Other Local Government Staff | 24.7 | 22.5 | 21.7 | 21.4 | 21.8 | 41% | | Total pay (a) | 50.6 | 46.2 | 43.3 | 41.4 | 41.2 | 77% | | Total non-pay for all groups (b) | 12.2 | 11.4 | 10.7 | 9.7 | 9.9 | 19% | | Other pay related costs (c) | 2.8 | 2.6 | 2.2 | 2.8 | 2.1 | 4% | | Total employee expenditure | 65.5 | 60.2 | 56.1 | 53.9 | 53.2 | 100% |

Source: Revenue Outturn - Subjective Analysis Return (SAR). (a) Includes overtime, bonuses, severance payments, etc. (b) Includes employers’ National Insurance, pensions contributions and location allowances. (c) Includes recruitment, retention and training. Table 6.2b: Employee expenditure as a proportion of total service expenditure for 2014-15

| Service Type | Employee Expenditure (£ billion) | Total Service Expenditure (£ billion) | Employees as % of total service expenditure | |-------------------------------------|----------------------------------|---------------------------------------|---------------------------------------------| | Education services | 23.0 | 39.2 | 59% | | Highways, roads and transport services | 1.4 | 7.4 | 18% | | Children Social Care | 3.2 | 8.8 | 37% | | Adult Social Care | 3.5 | 19.6 | 18% | | Public Health | 0.3 | 2.9 | 11% | | Housing services (a) | 0.6 | 3.0 | 22% | | Cultural and related services | 1.4 | 4.0 | 35% | | Environmental services | 1.5 | 6.7 | 23% | | Planning and development services | 1.0 | 2.5 | 40% | | Police services | 9.6 | 11.9 | 80% | | Fire and rescue services | 1.6 | 2.1 | 75% | | Central services | 6.0 | 12.4 | 48% | | Other services | 0.1 | 0.4 | 26% | | **Total service expenditure** | **53.2** | **121.0** | **44%** |

Source: RSX form (2014-15) (a) Expenditure on the General Fund Revenue Account only. (b) Total Expenditure is Employees expenditure plus Running Expenses

6.2.2 Further statistics on local government pay expenditure can be found via [https://www.gov.uk/government/collections/local-authority-revenue-expenditure-and-financing](https://www.gov.uk/government/collections/local-authority-revenue-expenditure-and-financing)

6.3. Local authority pension funds

The Local Government Pension Scheme

6.3.1. The Local Government Pension Scheme is operated in England via 81 administering authorities, typically at county council or London borough local authority level. The Scheme provides pensions for most local authority employees, as well as some staff working in the wider public sector such as academies, and certain individuals employed by private and voluntary sector organisations that deliver services for local government.

6.3.2. These authorities have the responsibility to meet pension liabilities as and when they arise. The administering authorities hold assets which they invest to help ensure that liabilities can be paid and to stabilise employer contribution rates to the Scheme over the medium and long term. The assets of the administering authorities are part of the financial corporations sector in the National Accounts, not part of the local government sector.

6.3.3. Although pensions are paid out under the scheme by local authorities in their capacity as administering authorities, this does not count as expenditure of the local authorities themselves. Employers’ contributions, part of the income of the funds, are recorded as expenditure by local authorities in their revenue accounts, either directly or indirectly under employees’ expenses.

6.3.4. Separate arrangements apply for the pensions of the police, fire fighters and teachers. The police and fire fighters’ pensions are provided through unfunded schemes administered locally, and the cost of police and fire fighters’ pensions are therefore included in local authority expenditure. Teachers’ pensions are provided through a notionally funded scheme administered by the Department for Education (DfE). There is no fund of assets, and teachers’ pensions are paid by the DfE. Employers’ contributions are paid by local authorities to the DfE and are recorded as expenditure in their revenue accounts.

6.3.5. Income into the LGPS is sourced from employee and employer contributions, investment income, the value of transfers between pension schemes plus other income. Table 6.3a show much income comes from each of these sources between 2010-11 and 2014-15.

| Table 6.3a: Local Government Pension Scheme income 2010-11 to 2014-15 | |-----------------|-----------------|-----------------|-----------------|-----------------|-----------------| | | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | | Contributions (including those from admitted authorities) | | | | | | | Employees(a) | 1,966 | 1,839 | 1,785 | 1,827 | 1,934 | | Employers(b)(c) | 5,947 | 5,920 | 5,732 | 6,030 | 6,837 | | Investment income (gross) | 2,696 | 3,045 | 2,983 | 3,164 | 3,338 | | of which: | | | | | | | Dividends receivable | 1,708 | 2,071 | 2,015 | 2,161 | 2,160 | | Interest receivable | 383 | 370 | 345 | 361 | 347 | | Income from property | 345 | 387 | 395 | 423 | 450 | | Other investment income (d) | 259 | 217 | 227 | 218 | 380 | | Transfer values(e) | 791 | 662 | 519 | 559 | 3,036 | | Other income | 96 | 82 | 79 | 53 | 58 | | Total income | 11,496 | 11,547 | 11,098 | 11,632 | 15,204 |

Source: SF3 returns (a) Employee’s contribution to the scheme are on a variable rate dependent on salary. (b) Includes employers’ secondary contributions (c) Employers contribution for 2011-12 includes a one-off exceptional item of £65m due to transfer of responsibility of scheme (d) Other investment income includes a one-off exceptional item of £120m due to the transfer to the Greater Manchester Pension Fund of MoJ/Probation Service staff from other LGPS schemes during 2014-15. (e) Transfer values for 2014-15 includes an exceptional transfer of £2.6 billion to the Greater Manchester Pension Fund from other LGPS funds in respect of MoJ/Probation Service staff who were transferred to that fund during 2014-15.

6.3.6. The majority of LGPS’ expenditure is on benefits, either as pensions or lump sums on the retirement or the death of members. Table 6.3b shows how the LGPS expenditure is divided between each of the categories between 2010-11 and 2014-15. Table 6.3b: Local Government Pension Scheme expenditure 2010-11 to 2014-15

| | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | |----------------------|---------|---------|---------|---------|---------| | Total expenditure on benefits | 6,730 | 7,534 | 7,504 | 7,848 | 8,269 | | of which: | | | | | | | Pensions or annuities| 5,021 | 5,503 | 5,998 | 6,323 | 6,691 | | Lump sums paid on retirement | 1,441 | 1,706 | 1,241 | 1,242 | 1,295 | | Lump sums paid on death | 153 | 164 | 163 | 168 | 172 | | Optional lump sum | 114 | 161 | 98 | 115 | 110 | | Other benefits | 1 | 1 | 4 | 1 | 1 | | Disposal of Liabilities | 829 | 551 | 476 | 472 | 2,952 | | of which: | | | | | | | Transfer values (a) | 818 | 551 | 476 | 471 | 2,950 | | Pensions Act premiums| 12 | 0 | 0 | 0 | 2 | | Refunds of contributions | 0 | 0 | 0 | 0 | 0 | | Costs charged to the funds | 437 | 468 | 492 | 572 | 810 | | of which: | | | | | | | Fund Management costs (b) | 313 | 353 | 374 | 449 | 689 | | Administration costs | 125 | 118 | 119 | 123 | 121 | | Other expenditure | 10 | 38 | 17 | 15 | 22 | | Total expenditure | 8,007 | 8,592 | 8,490 | 8,907 | 12,054 | | Market value of funds at the end of the financial year | 142,718 | 147,719 | 167,171 | 177,620 | 200,849 |

Source: SF3 returns

(a) Transfer values for 2014-15 includes an exceptional transfer of £2.6 billion from a number of LGPS funds to the Greater Manchester Pension Fund in respect of MoJ/Probation Service staff who were transferred to that fund during 2014-15.

(b) The way Fund Management costs are reported was changed during 2014-15 following revised guidance from CIPFA.

6.3.7. **Table 6.3c** shows the types of retirements from the LGPS between 2010-11 and 2014-15.

Table 6.3c: Type of retirements from the Local Government Pension Scheme 2010-11 to 2014-15

| | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | |----------------------|---------|---------|---------|---------|---------| | Redundancy | 17,657 | 27,525 | 13,110 | 12,876 | 12,074 | | Ill health retirement| 2,903 | 2,820 | 2,441 | 2,621 | 2,480 | | Early payment of deferred benefits | 20,344 | 20,923 | 25,139 | 24,392 | 29,402 | | Normal retirements | 21,585 | 23,016 | 19,717 | 20,779 | 18,883 | | Total retirements | 62,489 | 74,284 | 60,407 | 60,668 | 62,839 |

Source: SF3 returns

6.3.8. Further statistics about the Local Government Pension schemes in England can be found via [https://www.gov.uk/government/collections/local-government-pension-scheme](https://www.gov.uk/government/collections/local-government-pension-scheme)

The Firefighters’ Pension Schemes

6.3.9. Two firefighter pension schemes were operating in England on 31 March 2014: the Firefighters’ Pension Scheme (FPS or 1992 scheme), which was available to regular firefighters and which closed to new membership on 5 April 2006, and the New Firefighters’ Pension Scheme (NFPS or 2006 Scheme), which was available for both regular and retained firefighters employed after 5 April 2006.

6.3.10. Both the employer and employee pension contributions together with other sources of pension income, including transfer-in payments and ill-health charges are paid into a pension fund account, which is locally managed by each of the 46 fire and rescue authorities. Any authorised expenditure, to which includes pension payments, commutation lump sums and transfer-out payments, are paid out of the pension account. Any annual shortfall (cash flow deficit) between the total annual pensions income received and the total annual pension expenditure paid is reimbursed to each employing fire and rescue authority through the mechanism of the annual Firefighters’ Pension Top Up grant, which is paid by the Department for Communities and Local Government under Annually Managed Expenditure arrangements.

6.3.11. Further information about the Firefighters’ pension schemes in England can be found via [https://www.gov.uk/government/collections/firefighters-pension-scheme-statistics](https://www.gov.uk/government/collections/firefighters-pension-scheme-statistics)

6.3.12. **Tables 6.3d and 6.3e** provide figures of income and expenditure of the Firefighters’ Pension Scheme from 2010-11 to 2014-15.

### Table 6.3d: Firefighters’ Pension Scheme Income, 2010-11 to 2014-15

| | 2010-11 | 2011-12 | 2012-13 | 2013-14 | £million 2014-15 (a) | |----------------------|---------|---------|---------|---------|----------------------| | Employee contributions| 106.0 | 102.9 | 105.9 | 116.3 | 125.4 | | Employer contributions| 194.7 | 188.0 | 182.1 | 177.7 | 167.6 | | Ill Health | 3.7 | 4.8 | 5.5 | 5.8 | 6.3 | | Miscellaneous | 0.0 | 0.2 | 0.6 | 0.1 | 0.6 | | Transfers | 6.2 | 2.6 | 2.7 | 1.9 | 2.8 | | **Total** | 310.6 | 298.4 | 296.8 | 301.4 | 302.7 |

Source: FPF forms

(a) 2014-15 figures are unaudited, previous years’ are audited.

### Table 6.3e: Firefighters’ Pension Scheme Expenditure, 2010-11 to 2014-15

| | 2010-11 | 2011-12 | 2012-13 | 2013-14 | £million 2014-15 (a) | |----------------------|---------|---------|---------|---------|----------------------| | Pension outgoings | 599.7 | 640.3 | 659.7 | 702.9 | 737.5 | | of which: | | | | | | | Commutation payments | 126.9 | 132.3 | 116.2 | 223.7 | 234.0 | | Recurring outgoing payments | 472.8 | 508.0 | 543.4 | 479.2 | 503.5 | | Transfers out (b) | 4.7 | 3.4 | 7.1 | 6.8 | 8.5 | | Miscellaneous | 0.1 | 0.1 | 0.2 | 1.0 | 0.8 | | **Total** | 604.5 | 643.8 | 667.0 | 710.6 | 746.8 |

Source: FPF forms

(a) 2014-15 figures are unaudited, previous years’ are audited.

(b) This only includes transfers out of FPS and NFPS to other pension schemes.